Citroen Finance - Again!

bournefield3 · 18 August 2011 at 1:36PM

Hi,

I hope I am in the right area, if not forgive me, I am a newby.

I purchased a car with Citroen Finance over a year ago. I decided that it was high time to up my monthly payments. When I rang I was told that I could not do with, or it would mean me writing in monthly and them confirming in writing monthly. Eventually the person I was speaking to agreed to find out about this. She came back and apologised that she did not know people could increase their payments. I asked to increase mine to £250 per month and was told that a letter would come out.....

The letter arrived today, telling me that it would be increased to £254.23 per month and that a final payment of £349.23 (included back end fee) would be payable. Along with that there would be a charge of £65 to make the change. I phoned and asked them to explain the £65 and she said it was just something they did, she could not explain how it was quantified!:mad:

What is a back end fee and how can they rightfully ask for £65 for changing my payments. I increased the payments on my credit card and did not get charged for any changes.

Can they do this? I am guessing someone will tell me yes, but how about the amount

Tixy · 18 August 2011 at 1:51PM

Does the finance agreement you have with them mention overpayments? and what did it say about charges for other changes etc?

It sounds like they have effectively recalculated your repayment over a reduced term and are I guess are probably charging you for a change in the agreement. The problem with this is that if you did ever need to drop them back to what you used to pay you will probably not be able to.

bournefield3 · 18 August 2011 at 2:10PM

Thanks Tixy, I shall look that out tonight, in the meantime I have asked for a small bank loan to pay this all off.

I guess I would like others to be aware before putting themselves in the same position.

NeverEnough · 18 August 2011 at 2:31PM

The problem is that when one "agrees" a finance agreement with a company, it is a contract that they will loan you x amount of money in order to finance the purchase and you undertake to repay that over y number of months for the sum of X plus Z interest and other fees which are described in the Contract. People don't always take note of the small print in the excitement of buying the new car, and many, if not most, such contracts, have a "final exit fee" or whatever other silly name they want to call it, as well as other listed charges for making changes to the Contract once it is signed and in effect - that's how finance companies make their money.

You effectively want to change the terms of your contract by reducing the term, which will also have the effect of reducing the agreed income to the finance house. They do allow this, subject to the fees which will be somewhere deep in the small print, but as Tixy says, if you want to reduce the payments again if circumstances change, you may find they refuse.

Car Finance Contracts and HP agreements are not intended to be flexible repayment items - they are by their nature fixed term with contractually agreed repayments etc, unlike Credit Cards and, quite often, ordinary unsecured loans, which will allow overpayments without penalty.

I would agree that paying it off in a lump sum from a different source is probably a better way of dealing with it - expecting to change the terms of a contract some way into it is not the best way to go and a lender would be within their rights to make a charge as detailed in their small print, for doing this.

spikyone · 18 August 2011 at 2:59PM

NeverEnough wrote: »

I would agree that paying it off in a lump sum from a different source is probably a better way of dealing with it

The OP would do well to look at the Ts & Cs first. I had a finance agreement with Peugeot - effectively the same company. After being made redundant (and already having a new job lined up) I made a lump sum payment to my agreement to reduce the monthly payments.
It didn't cost me anything to do that, but it was no advantage - the reason being that the finance agreement included the interest as an up-front lump sum, so you can't change the total amount you pay. In this case the OP would be better off putting the overpayments into some kind of high interest savings (with a limited number of withdrawals to help avoid touching it early!), effectively reducing the interest on the loan. I'm far savvier now...